Yahoo on defensive at shareholder meeting

Yahoo was criticised by some shareholders on Friday for the way it handled Microsoft's attempted acquisition, but in the end there were fewer fireworks at its annual meeting of stockholders than some had expected.

James Niccolai, IDG News Service
August 4, 2008

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Yahoo was criticised by some shareholders on Friday for the way it handled Microsoft's attempted acquisition, but in the end there were fewer fireworks at its annual meeting of stockholders than some had expected.

Chairman Roy Bostock may have helped diffuse the concerns with a lengthy defence at the start of the meeting in San Jose, California, about how Yahoo handled the process.

In a sometimes impassioned explanation, he said Microsoft's bid had placed "a hell of a burden" on Yahoo's management at a time when it was trying to implement its new growth strategy.

"There was never a deal put on the table that was compelling enough that we, as the board, could look the shareholders in the eyes and say this is a good deal for you," Bostock said.

Some shareholders did have terse words for the board. One suggested that Bostock "do the honourable thing" and step down. "I think you've overpaid for executive compensation, overplayed your hand with Microsoft and overstayed your welcome," the shareholder said during a question-and-answer period toward the end of the meeting.

Another said in an interview before the meeting that he had been "ecstatic" the morning Microsoft made its offer to buy Yahoo, and criticised the board for fumbling the deal. "They can regain my confidence, but they're going to have to prove themselves first," said Sam Tramiel, a private Yahoo investor and a former CEO of Atari.

But the Q&A period was not an endless barrage of criticism about the Microsoft deal, and a few shareholders had praise for Yahoo. One man congratulated the board for fending off "the green-tentacled octopus up in Redmond," referring to Microsoft, while another said she approved of Yahoo's plan to seek growth from emerging markets and mobile-phone users.

"Competition is good for the industry and for consumers, so I am happy that Microsoft did not succeed in acquiring Yahoo," she said.

At least as much of the Q&A focused on the way Yahoo does business in countries that stifle free speech and human rights. The shareholders were asked to vote on two proposals related to the issue, one of which asked the company to institute a policy that it will not host data about users in countries with repressive regimes, so that Yahoo can't be forced to hand over information that could lead to an arrest.

"Yahoo has actively participated in these human rights abuses, including the censorship of information and, in one case, turning over information to the Chinese government" that led to the arrest of a Chinese journalist, said Patrick Doherty, who presented the proposal for the New York Office of the Comptroller, which holds Yahoo stock.

A related proposal, submitted by an individual shareholder, John Harrington, would have had Yahoo form a committee to oversee its activities related to human rights. Harrington said Yahoo has been accused of having "the moral fiber of pygmies."